KBRA Assigns A- Issuer and Senior Unsecured Debt Ratings to Sumisho Air Lease Corporation; Expects to Rate Senior Unsecured Notes Issuance A-

Core Viewpoint - KBRA assigns an A- issuer and senior unsecured debt ratings to Sumisho Air Lease Corporation, which will emerge from the merger with Air Lease Corporation, with a stable outlook [1] Group 1: Ratings and Financial Structure - KBRA expects to assign an A- rating to the senior unsecured notes expected to be issued by Merger Sub, which will be used for acquisition consideration, debt repayment, and general corporate purposes [1] - Sumisho Air Lease Finance Corporation, the 100% owner of Merger Sub, also receives an A- rating for its $1.0 billion senior unsecured term loan and $3.5 billion senior unsecured revolving credit facility [1] - The transaction to acquire Air Lease Corporation is valued at approximately $7.4 billion and is expected to close in the first half of 2026, pending regulatory approvals [1] Group 2: Key Credit Considerations - The ratings reflect the strategic importance of Sumisho Air Lease Corporation to its majority owners, SMBC Aviation Capital and Sumitomo Corporation, both of which have strong credit profiles and aviation expertise [1] - There is a high likelihood of parental support for Sumisho Air Lease Corporation due to its strategic importance, operational integration, and shared management with SMBC Aviation Capital [1] - The company is expected to maintain a strong standalone credit profile, benefiting from a quality fleet and diverse customer base [1] Group 3: Liquidity and Financial Metrics - Sumisho Air Lease Corporation's liquidity profile is supported by a $3.5 billion unsecured revolving credit facility and unrestricted cash, which is expected to cover near-term debt obligations [1] - The projected leverage on a Debt-to-tangible common equity basis is 3.5x at transaction close, expected to decline to 3.0x with planned aircraft sales [1] - The ratings are balanced by uncertainties regarding long-term growth and fleet metrics without an orderbook, as well as cyclical industry risks [1] Group 4: Market Dynamics and Outlook - The stable outlook reflects acceptable leverage targets and strong funding profiles, alongside resilient performance from Air Lease Corporation and SMBC Aviation Capital during market disruptions [1] - Favorable industry dynamics for aircraft lessors, characterized by robust demand and limited supply, are expected to drive higher lease rates and aircraft values for several years [1]